HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Andhra Pradesh State Road Transport Corporation v. Income Tax Officer and Another
Civil Appeals Nos. 475–478 of 1963
[1964] 7 SCR 17 ·
Constitution of India: article 289(1), (2) and (3) · Indian Income Tax Act, 1922: sections 3 and 22 · Road Transport Corporations Act, 1950: sections 3–5, 17–18, 23–34 and 38–39
Sources & disclosures includedDownload original judgment / order
5-judge bench · P. B. Gajendragadkar, C.J. · K. N. Wanchoo, J. · J. C. Shah, J. · N. Rajagopala Ayyangar, J. · S. M. Sikri, J.
Assessment years: 1958-59, 1959-60
01 · Facts of the case
The corporation began on 11 January 1958 under the Road Transport Corporations Act after transport had previously been run departmentally and treated as exempt. It was assessed Rs. 13,60,963.86 for the short 1958-59 period and Rs. 34,44,430.48 for 1959-60. Its writs argued, among other points, that section 30 ultimately directed income to Andhra Pradesh and therefore article 289 protected it. The High Court rejected that claim, local-authority status and alleged repugnancy between the two statutes (SCR pp.17–20; PDF pp.1–4).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
Article 289(1) protects State property and income; clause (2) permits Parliamentary taxation of State trade or business, and clause (3) can restore protection for business declared incidental to ordinary governmental functions. Every route still required the disputed income to belong to the State (SCR pp.20–26; PDF pp.4–10). The corporation had a statutory personality separate from the State and other shareholders. The Court examined its body-corporate status, possible non-government shareholders, capital, funds, dividends, profit use, supersession and liquidation. Those provisions treated its assets and trading profit as corporate, even though government supplied most capital and exercised extensive control. Restricted transfer of a remainder to the State for road development did not change ownership of the income (SCR pp.26–30; PDF pp.10–14). The transport statute's silence about income tax created no inconsistency with the charging law (SCR pp.30–31; PDF pp.14–15).
Source: Primary judgment: discussion
03 · Judicial decision
The Court dismissed all four appeals with costs and one hearing fee. The corporation's transport income was its own and not State income exempt under article 289(1); the alleged statutory repugnancy also failed (SCR pp.30–31; PDF pp.14–15).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Revenue. State control, majority governmental capital and restricted surplus use did not overcome the corporation's separate statutory personality for article 289 (SCR pp.26–31; PDF pp.10–15).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: begin with legal ownership of the income, then examine the enabling statute for any express or necessary attribution to government. Record capital contributors, outside-share powers, dividend rights, fund ownership, surplus destination, supersession and liquidation. Public function and government control alone do not satisfy article 289(1). Keep this constitutional-immunity ruling separate from later charitable-exemption decisions involving the same corporation (based on SCR pp.20–31; PDF pp.4–15).
Source: Primary judgment: reviewPoint
Source & verification
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Statutory scope
The decision addresses article 289 and the Road Transport Corporations Act, 1950 in assessments for 1958-59 and 1959-60 under the Indian Income Tax Act, 1922. It does not certify the corporation's treatment under later charitable-exemption law or current statutory provisions.
Later treatment
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